A terrible business-class trend is spreading in Europe. Let's hope it doesn't come to the US
The proliferation of fees has been one of the most annoying changes over the past decade in the world of travel.
We are getting nickel and dimed with new fees ... from service fees, resort fees and baggage fees to seat assignment fees, housekeeping fees and environmental fees. You name it; they've created a charge for it.
One of the most egregious new fees we see nowadays is for airline seat assignments. It's common knowledge that most airlines charge for choosing not only extra legroom but also 'preferred' seats in coach. These standard seat assignments used to be free, but now they are the purview of elites and those willing to fork over the cash.
Seat assignment fees are spreading to business class
Air France and KLM, joint partners (partially owned by Delta Air Lines), now charge customers for advanced seat assignments in business class. These are seats that can already cost up to $10,000. But now, once you've purchased a business-class seat (or used miles to secure it), you'll need to pay between 70-90 euros ($76-$98) per flight to pick a seat ahead of time.
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"With the current model of seat selection, Air France and KLM business class customers are not always assured of getting their preferred seat," said Julia Gordon, communications director for Air France USA, through an email. "By introducing the Advanced Seat Reservation as a paid option, Air France and KLM will increase the chance that our customers do actually get their preferred seat."
There are some exceptions. Elite members of the joint Air France-KLM Flying Blue loyalty program are exempt from the fees, so if you are a Flying Blue Silver, Gold or Platinum member, you won't have to pay to pick your business-class seat. You'll also be exempt if you fly as part of a corporate contract with the airlines. Additionally, you can still pick a business-class seat for free among what's still available at the 24-hour check-in window.
One of the more annoying parts of this is that it was almost without any advance notice. It's already in place for flights departing after April 13. It originally included flights to North America, but that has since been pulled back because of their transatlantic joint venture with Delta and Virgin Atlantic. However, if they rolled it out once, it could easily come back.
"The execution of the Air France-KLM change is very poor — to charge someone who may be paying thousands of dollars a fee to reserve a seat in advance if they don't have frequent flyer status is insulting," said Henry Harteveldt, a travel industry analyst and president of Atmosphere Research. "As a passenger, I'm not at all happy to see AF and KLM introduce seat assignment fees for business class; as an analyst, I'm not surprised."
In fact, Harteveldt has predicted fees for business-class seats since at least 2016.
The move copies competitor British Airways, which has had a similar policy in place for years. Lufthansa, Swiss and a few other European carriers also charge for some business-class seat assignments.
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Will this spread to US airlines?
The worry, of course, is that it could come to the U.S. market next.
Harteveldt said that would depend on the Air France and KLM fees' effect on business.
"They will look to see if there's any shift in market share or negative reaction from corporate accounts," Harteveldt said. "Seat assignment fees will soon arrive on U.S. airlines if there is no meaningful negative reaction ... then you'll see U.S. airlines adopt the model."
It should be considered a failure by KLM and Air France since they never capitalized on the lack of fees during those years when British Airways was charging for seat assignments and they weren't, according to Harteveldt. He also said the airlines should have considered offering a stripped-down version of business class that was cheaper and came with fewer frills like extra baggage, lounge access and seat selection.
"If they introduced a de-contented fare like Emirates has that strips out stuff ... [usually included with] a basic business-class fare, that would be more understandable," Harteveldt said. "With the reduction in business travel, maybe it makes sense for airlines to consider (a basic business-class fare) if they would be able to sell more of their premium cabin seats."
"I can't say that I'm surprised," shared Brian Sumers, an industry expert who authors the Airline Observer newsletter. "Air France-KLM essentially has two competitors on that side of the Atlantic — International Airlines Group and Lufthansa Group. So, we know that British Airways has had seat fees for a very long time, and we know that Lufthansa Group has charged for its special throne seats as well."
"We also have a new development," Sumers continued. "Lufthansa is coming out with its new business class, and they are going to charge for everything. It's going to be the most complicated configuration for seat fees ever."
At the same time, Sumers said he understands the reasons behind it, including that business-class travel hasn't fully recovered from the COVID-19 pandemic.
"It used to be that an airline like Air France would sell out the front cabin to bankers and lawyers who didn't care how much money they paid," explained Sumers. "A lot of that business is gone. TPG readers probably have bought a lot of business class tickets for the summer. In their minds, they paid a lot of money for their tickets, but that premium leisure demand doesn't exactly replace the business demand on a one-to-one basis."
When I asked him if he thought U.S. carriers would copy the move, Sumers said, "I think U.S. airlines are more attuned to the political climate than passengers may think. There has been enough heat on airlines for their fees that I think people that work at airlines are taking an extra hard look before they add a new one."
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Unfortunately, both Harteveldt and Sumers agree that fees are here to stay.
"The consumer says they are fed up, but every day they get on budget airlines where it's fee central," Harteveldt said. "They have a Ticketmaster-like fee, fuel recovery, advance seat reservations. They charge for carry-on and checked luggage. We haven't seen any of the network airlines say maybe we can gain market share by not charging fees and going back to an all-inclusive model and advertising it aggressively. Instead, they have all copied the budget airline model of a la carte experience."
"If there was a backlash, there would have been a major shift in market share," Harteveldt continued. "We haven't seen a backlash ... where passengers are revolting against the airlines that charge fees and a shift in market share to airlines that did not charge fees. Given the profits that airlines earned from these products, they are not going to give up any of that unless it's forced on them by either the government or a change in the competitive environment."
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